Future FinTech Group Inc.
Q3 2014 Earnings Call Transcript
Published:
- Operator:
- Greetings and welcome to the SkyPeople Fruit Juice Incorporated, third quarter 2014 earning conference call. At this time all participants are in a listen only mode. A question-and-answer session will follow the formal presentation. [Operator Instructions] As a reminder this conference is bring recorded. It is now my pleasure to introduce your host Mr. David Rudnick. Thank you. You may begin.
- David Rudnick:
- Thank you, Rob. Good morning ladies and gentlemen and good evening to those of you joining us from China. I’m David Rudnick of Precept Investor Relations. I would like to welcome all of you to SkyPeople Fruit Juice Inc.’s third quarter 2014 earnings conference call. The company has filed its Form 10-Q with the SEC on Friday, November 14 and issued its earnings press release on that date as well. Joining us from the company today are Mr. Xin Ma, the company’s Chief Financial Officer, who will provide some opening remarks. And before we start, I’d like to remind our listeners on this call, that management’s prepared remarks contain forward-looking statements, which are subject to risks and uncertainties and management may make additional forward-looking statements in response to your questions. Therefore the company claims the protection of the Safe Harbor for forward-looking statements that is contained in the Private Securities Litigation Reform Act of 1995. Actual results may differ from those discussed today, due to various risks including but not limited to such factors as unanticipated changes in product demand or market acceptance of the company’s products, the company’s ability to meet its financial guidance, competition in the marketing and sales of its products, the successful development of projects and its R&D pipeline and other information detailed from time-to-time in this filings and future filings with the SEC. Accordingly, although the company believes that the expectations reflected in such forward-looking statements are reasonable, there can be no assurance that such expectations will prove to be correct. In addition, any projections as the company’s future performance represent management’s estimates as of today, November 17, 2014. SkyPeople assumes no obligation to update these projections in the future as market conditions change. And now it is my pleasure to turn the call over to SkyPeople’s Chief Financial Officer, Mr. Oliver Ma. Mr. Ma?
- Xin Ma:
- First of all, I’d like to thank all of you for joining this conference call today. We are very pleased to report these strong financial results, highlighted by our balanced contribution to revenue among our core product due to the general availability of fresh fruit raw materials during the quarter. These quarterly results confirm our strategy for procuring sufficient quantities of fresh fruit by locating our production center near fruit growing centers in large fruit producing provinces. In terms of our major project initiatives, our project to develop a manufacturing base for kiwi products in Mei County has shown progress with the construction of a kiwi fruit and kiwi related materials trading zone now mostly completed. Our orange development project in Hubei Province is also making progress. The goal of these two projects is to meaningfully expand our processing capabilities. SkyPeople now sells our fruit juice beverages to more than 20,000 retail stores in 20 provinces of China. China's rising income we believe are speeding the transition in consumer tastes towards healthy living, including the increased consumption of high-quality fruit juice beverages. We are therefore well positioned to capitalize on this trend and to contribute to capture additional market share. I’ll now turn to the discussion of operating results. Revenue for the third quarter of 2014 was $34.8 million, an increase of 79% as compared to the same period in 2013. This increase was due to an increase in sales in almost all of our product lines, offset by the decrease of revenue generated from other product segment. Gross profit was $10.2 million in the third quarter of 2014, an increase of 41% from the same period in 2013. The increase was primarily due to the increase in gross profit generated from apple-related products, concentrated pear juice, fruit juice beverages, fresh fruits and vegetables and other product segments, which was partially offset by a lesser amount of gross profit generated from kiwi-related products. Operating expenses was $3.0 million in the current quarter or 9% of sales, as compared to $2.6 million or 13% in sales for the same period last year. General and administrative expenses decreased 19% to $1.3 million as compared to $1.6 million last year, but selling benefits increased 63% to $1.6 million as compared to $1 million for the same period last year, mainly due to an increase in shipping and handling cost as a result of increased sales. Income from operations was $7.2 million in the current quarter, an increase of 57% as compared to the year ago quarter. Net income for the current quarter was $4.7 million, an increase of 45% versus last year with earnings per share attributable to SkyPeople of $0.17 for the current quarter as compared to $0.11 for the same period last year. And now for our sales by product segment. Sales from apple-related products were $5.6 million for the current quarter, a significant increase from sales of approximately $35,000 last year. The company sold approximately 4,370 tons of concentrated apple juice in the current quarter, up from 50 tons solid in the year ago quarter. Sales from concentrated kiwi juice and kiwi puree were $33,000, a 33% increase from the sales of $27,000 for the same period last year. We sold approximately 106 tons of this product in the current quarter as compared to 221 tons last year. Sales of concentrated pear juice were $10.5 million, an increase of 71% from last years third quarter. The company sold approximately 7,644 tons of pear juice as compared 2,802 tons in the same period last year. The increase in revenue was mainly due to increased volume, which was partially offset by a decrease in unit price. Revenue from fruit juice beverages were $14.5 million, an increase of 13% from last year. The increase due to market share gains was continuous efforts of expanding the segment sales channel. Revenue from our fresh fruit and vegetables were $3.9 million, in the current quarter and was $1,000 for the same period last year. And finally, revenue from other product segments were $10,000 in the current quarter, a decrease from sales of $147,000 for the same period 2013. Now turning the company’s current financial position. As of September 30, 2014 the company had $52.7 million in cash, cash equivalents and restricted cash, compared to $74.1 million as of fiscal year end 2013. The company’s restricted cash of $18.8 million consists of cash equivalents used as collateral to secure short-term bank note payable. The company’s working capital was $31.3 million as of the end of the current quarter compared to working capital of $71.9 million as of fiscal 2013 year end. The company had total liabilities of $99.5 million, including $44.9 million in short term bank loans and bank notes payable and an $8 million long-term loan to a related party and $20.2 million in capital lease obligations. Shareholders' equity attributable to SkyPeople was $177.1 million as compared to $173.5 million as of fiscal year-end 2013. For the first nine months of 2014 the company’s operating activities generated a net cash inflow of $12.9 million as compared to $31.4 million for the first nine months of 2013. Net cash used in investing activities was $37.1 million as compared to $39.2 million last year. And cash flow used in financing activities totaled $8.3 million as compared to cash flow provided by financing activities of $15.6 million. Now turning to our outlook, we are developing facilities to developed and process orange products in the Hubei Province, one of the biggest orange production provinces in China. This is consistent with our strategy to further diversify our product platform in order to mitigate, both the regional and seasonal cyclicality of our products. The Hubei local government is in the process of demolishing buildings on the project land, and the company is actively working with various bodies of the local government to make preparations for the start of the project. We are also developing a key processing facility in Mei County. As an update, the company is in the process of wholesaling facilities and purchasing equipment and so our production has been delayed. In addition the construction of a kiwi fruit and other-related materials trading zone has been mostly completed. We are also developing a fruit and vegetable industry chain and processing zone in Suizhong County, Liaoning Province, to include the construction and operation of fruit juice production lines among other storage and processing facilities. Our new projects are important strategic initiatives, to aware our self of the market opportunity presented by urbanization, growing incomes and the growing percentage for our fruit juice products. At this point I would now like to open up the call to any questions you might have for the management team. Operator, please begin the Q&A session. David, lets begin the Q&A session please.
- Operator:
- [Operator Instructions]. It appears there are no questions at this time. I would like to turn the floor back over to David Rudnick for closing remarks.
- Xin Ma:
- David? Okay, I would do the closing remarks. On behalf of the entire SkyPeople Fruit Juice management team, we would like to thank all of you for your time and your interest to participate on the call. And this concludes SkyPeople Fruit Juice third quarter 2014 earnings call. Thank you. Bye-bye.
- Operator:
- This concludes today’s conference. Thank you for your participation. You may disconnect your lines at this time.